Behavioral Finance and Investment Choices: Psychological Biases in Fixed Income, Equities, and Dollar Exposure

• Author(s): Aline Caroline Moraes Oliveira
• Paper ID: 1712754
• Page: 616-619
• Published Date: 31-01-2022
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 5 Issue 7 January-2022

Abstract

This article explores the impact of key behavioral finance biases on investor decision-making when choosing among fixed income securities, equities, and foreign currency investments, with a focus on the psychological mechanisms influencing these choices. Specifically, it examines how loss aversion drives an exaggerated preference for fixed income products, how anchoring bias shapes decisions to dollarize portfolios, and how social media and financial influencers contribute to shifts in investor profiles from conservative savers to risk-taking participants in stocks and cryptocurrencies. The analysis draws on seminal and recent academic literature to provide a comprehensive understanding of how cognitive and social biases affect portfolio allocation, potentially leading to suboptimal investment outcomes. Recognizing these biases is essential for improving financial literacy and promoting more informed and rational investment strategies.

Keywords

Behavioral Finance, Loss Aversion, Anchoring Bias, Social Media Influence, Investment Decision-Making, Fixed Income, Equities, Dollarization, Investor Behavior, Cognitive Biases.

Citations

IRE Journals:
Aline Caroline Moraes Oliveira "Behavioral Finance and Investment Choices: Psychological Biases in Fixed Income, Equities, and Dollar Exposure" Iconic Research And Engineering Journals Volume 5 Issue 7 2022 Page 616-619

IEEE:
Aline Caroline Moraes Oliveira "Behavioral Finance and Investment Choices: Psychological Biases in Fixed Income, Equities, and Dollar Exposure" Iconic Research And Engineering Journals, 5(7)